What To Do When Markets Get Smashed

What To Do When Markets Get Smashed

The stock market is getting hit, and gold and bonds are rallying.

And the cause, the trade war with China is getting worse and more unpredictable.

I didn’t predict the trade war escalating, but we have been cautious since the Fed rattled the markets last Thursday.

Here’s how to play this market now.

First, don’t panic, and adhere to your stops.

As for looking for new ideas, be patient.

Today is not the day to try to “catch a falling knife.”

The QQQ is currently at a support area from consolidation in June, and the SPY is just under its respective support from that time.

In the chart below of the S&P 500 Index ETF (SPY) you’ll see I drew 2 black lines.

https://lh3.googleusercontent.com/9CaD0REJ4edNuOBoU57gdkRzt0n9njhQWCkQjQWy7f8xXUge_Lc7LJkW3zwS3LzJTpUzJeFgKRH8tScjPeNO0KedyhgHB9-YsDurHIzfkoYV1LlBlzjKYxysJHa5qEcyf5vk2GZC

The black line at $288 represents a level that should the SPY close above, then we might consider it trying to hold support.

Until the SPY closes over $288, or creates a new pattern, consider the market in a condition that we should avoid entering new longs.

We will, however, continue to identify opportunities to be prepared for the market’s bottom.

On a bearish note, the lower black line around $278 represents the next major level of support. The 200-day average is around $277.

If the market continues to fall over the coming days or weeks, this is a likely target.

In short, today is a “wait and see” day where we should just manage stops and if you’re in the GLD and GDX trades, be happy to have them on as they are doing great.

Trade smart,

Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation